- The ECB is not yet satisfied with the recent developments in inflation.
- Further rate hikes remain a possibility as inflation risks are still on the upside.
- Longer-term inflation expectations continue to be significantly above the 2% target.
- Advocacy for a reduction in the ECB’s balance sheet, which could be accelerated.
- It is currently too early to consider rate cuts.
Meanwhile, the euro zone CPI data today was weaker than expected.
- Flash CPI 2.4% versus 2.7% expected and 2.9% last month
- Core flash CPI 3.6% versus 3.9% expected and 4.2% last month
Yes inflation remains above target but progress is being made to the downside
This article was written by Greg Michalowski at www.forexlive.com. Source